Is it time to finally declare a manufacturing renaissance? An index by the Institute for Supply Management has grown for 33 straight months, and Rust Belt states such as Ohio and Michigan have registered big drops in unemployment over the year. Ohio dropped to 7.5% unemployment in March from 8.8% the previous year, and Michigan dropped to 8.5% from 10.5% in March of last year.
The folks at Manning & Napier, the $40-billion asset management firm, say there are some reasons to be very optimistic about manufacturing in the U.S. Wages overseas are rising – China alone has experienced double-digit wage growth in each of the last two years. Supply chain disruptions in the wake of the Japanese tsunami are making companies rethink depending solely on emerging markets for products. And the U.S. energy boom makes it cheaper to pay the utility bills if you manufacture here.
“We are in the very early innings of this trend,” said Chris Petrosino, managing director of the quantitative strategies group at Manning & Napier.
This is the first time in more than two decades that manufacturing employment as a percentage of total nonfarm employment has stopped falling, according to a Manning & Napier report entitled “The U.S. Manufacturing Renaissance: Silver Lining, Not Silver Bullet.” The nation has added nearly half a million manufacturing jobs from January 2010 to February 2012. While employment won’t return to 1970s levels, the multiplier effect that manufacturing has on the economy is good news – every factory job added creates three additional jobs.